Fund flap: Questions raised about treasurer's office fund

Published 8:00 pm, Tuesday, July 27, 2004

Questions about one fund and how Midland Countys treasurer handles it have been raised, just days before Tuesdays primary election.

And an opinion from the countys legal counsel indicated Treasurer Wynne Downing had inappropriately used the money to set up a website, a charge Downing denied.

County officials reviewed the countys 2003 audit during Tuesdays Board of Commissioners finance committee meeting, at which the questions surfaced. The audit was done by Rehmann Robson of Saginaw.

The audit stated that information on the Foreclosure Fund imprest checking account was not being provided to the countys finance department for approval and reimbursement. An imprest account operates similar to a petty cash account.

The auditors reviewed the account and said the expenditures appeared to be for valid county purposes. But they were concerned that the proper accounting records were not being maintained. They recommended the finance department be given the information and Downing agreed to do this.

Commissioner Howard Schoenherr asked how the county could have a "clean" audit while auditors questioned an account.

"These items, from an audit standard, are smaller items," one auditor said.

Schoenherr noted at least one township had a clean audit, but later had financial problems.

"How do we watch out for that?" Schoenherr asked.

The auditors recommended internal controls, including the board, to watch over accounts and prevent problems.

Administrator/Controller David Benda then talked about some issues with the Foreclosure Fund.

The Foreclosure Act 123 of 1999 states the county treasurer is the foreclosing governmental unit (FGU). One thing the FGU does is deposit proceeds from property sales in a restricted account.

Money from foreclosures can be used to:

 reimburse the delinquent tax fund.

 pay costs of the sale of property for the year.

 pay costs in the foreclosure process, such as mailings.

 pay unpaid costs of sale of property or foreclosure process from prior years.

 pay before-sale costs of maintaining foreclosed property.

Downing used $25,000 of the funds money to buy web software and build a website where users can search for public tax information. Benda said she also used fund money to pay for items rejected by the board for insufficient documentation or unauthorized staffing.

County legal counsel L. William Smith gave a legal opinion Tuesday. Smith said the Foreclosure Act does not exempt the fund from the countys policies and documentation requirements and that the act does restrict how foreclosure money can be spent.

Smith also said the administrator/controller was the countys "chief financial officer" and this gives him charge over the "accounts and accounting of every office, officer and department of the county."

"All county officers or employees shall furnish such information respecting all county matters in their charge as the controller shall require," he wrote, quoting the law.

Downing said she believes this issue is coming up now because it is the week before the primary campaign. She said she did not know the Foreclosure Fund would be discussed at Tuesdays meeting and has not seen Smiths legal opinion. It wasnt on the committee agenda.

"They discuss something before I even get it," she said.

She said she uses the imprest account when she goes to propeties and needs to do things such as post foreclosure signs or pay to shut the homes water off.

"Everythings by check so I dont have to handle cash," Downing said. She said the checks are important for documentation.

Downing said she does not need board approval when spending Foreclosure Fund money, and thats why she could spend $25,000 for the website. She also said the state Department of Treasury helped her set up the fund account.

"Theres nothing in the act that the controller has control over (the fund)," she said.

She said she does provide documentation. She said everyone  including herself and the janitor  has to sign a confidentiality agreement because some records have names and Social Security numbers.